davex
Member of DD Central
Posts: 81 
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Post by davex on Dec 10, 2015 13:06:09 GMT
● We are changing how safeguard is funded. Previously, it was funded completely from the borrowers' origination fee. In the future it will be funded through a combination of origination and servicing fees. This will mean that there will be loans with servicing fees greater than 1%. This change does not affect pricing, your expected return or intended safeguard coverage. The change is to reduce upfront fees for borrowers.
● After research and testing into 1 year loans and secured auto loans, we are now also offering these markets to individual lenders. The 1 year loans will be added to the 2 and 3 year loans market and secured auto loans will be treated as a new risk market. Neither change will impact the projected returns to lenders.
Above from an email received today.
Good or bad?
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james
Posts: 2,205
Likes: 955
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Post by james on Jan 9, 2016 15:09:30 GMT
● We are changing how safeguard is funded. Previously, it was funded completely from the borrowers' origination fee. In the future it will be funded through a combination of origination and servicing fees. ... The change is to reduce upfront fees for borrowers. ... Good or bad? The previous setup was unfair to borrowers who made lots of overpayments or settled the whole loan early so it's good. Before, they would have had to pay up front for perhaps five years of £10k borrowed even if after one year they reduced that to 1k borrowed then after three years repaid the rest. A few years ago I asked Zopa to do something like this so I'm pleased that they have done it, though I do wonder how substantial the initial part will be. The initial part has to take account of some risks like identity fraud that aren't present over the whole term, so some extra initial part makes sense.
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